“After
a decade of boom-bust-boom, the U.S. housing market is going down-hill just
when many economists thought it would be heading upward. Sales of previously owned properties tumbled
7.5 percent in March from the previous year, to the slowest pace in 20 months,
while purchases of new houses sank 14.5 percent from February. And applications for mortgages to buy homes
are indicating fading demand during what is typically the busiest season for
deals….
“Housing’s
woes are slowing the economic recovery.
Residential investment, including construction of single-family and
multifamily homes, residential remodeling, and brokers’ fees, accounted for 3.1
percent of gross domestic product in the fourth quarter, less than half the
peak contribution of 6.6 percent in 2006, according to an April 28 report by
Capital Economics. ‘The apparent
crumbling in the housing recovery has, at least temporarily, removed a valuable
support to GDP growth,’ the report said….
“The
National Association of Realtors’ Housing Affordability Index, which compares
household incomes with home prices and mortgage rates, fell 16 percent in the
12 months through February, the most recent month from which data are available….
“…The
average rate for a 30-year fixed-rate mortgage was 4.33 percent in late April,
according to Freddie Mac, up a full percentage point from a near-record low
last May. That raised the cost of a
$200,000 mortgage 13 percent, sending monthly payments to $993 from $881….
“Nationwide,
investors accounted for 17 percent of home purchases in March, the lowest share
for that month since the National Association of Realtors began tracking the
figure in 2008. Meanwhile, the share of
Americans who own their own homes was 64.8 percent in the first quarter, down
from 65.2 percent in the previous three months, the Census Bureau said on April
28. The rate is the lowest since the
second quarter of 1995, when it was 64.7 percent.”
[Bloomberg Businessweek, May 5-11]
[Bloomberg Businessweek, May 5-11]
